Packaging Sizes - Animal-Based Dairy Milk

Part
01
of four
Part
01

Plant-based Milk: Price

The current price of plant-based milk, like oat milk, can be 2 to 3 times the cost of skim or whole cow's milk. However, the average price per hundredweight (cwt) of almond milk declined by 2%, soy milk declined by 5%, while coconut milk increased by 13% from 2015 price.

CURRENT PRICE OF PLANT-BASED MILK

  • Sales of plant-based milk currently accounts for 15% of the total milk market in the United States in 2018 and 13% in 2019.
  • In 2018, plant-based milks saw a 9% increase in sales compared to cow's milk, according to Plant Based Foods Association.
  • Comparatively, the price of 1 gallon of nut milk or oat milk can be 2 to 3 times the cost of skim or whole cow's milk.
  • This is because plant-based milks are not subsidized and tend to be available at specialty stores.
  • Preference to new options is gaining popularity as 63% purchased more pecan milk in 2017 compared to 2016, and 58% purchased quinoa milk in 2017 than in 2016.
  • Below is the current average price per gallon of plant-based milk in the US:
  • When measured based on hundredweight (or cwt), the average price per cwt is equivalent to $17.30 in 2019 according to USDA.

  • HISTORICAL PRICE COMPARISON

    • Based on a study released by Mintel, plant-based milk sales grew to 61% from 2012 to 2017 at $2.11 billion market while dairy milk sales had a 15% decline for the last 5 years.
    • However, when it comes to unit price as compared to 2015, the calculated per unit value of plant-based milk in 2017 had the following changes in price:
      • Almond milk: declined by 5%
      • Soy milk: declined by 2%
      • Coconut milk: increased by 13%

    OTHER HELPFUL FINDINGS

    • The most popular among the plant-based/non-dairy milk are almond (with 64% market share), soy (13% market share), and coconut (12% market share).
    • Almond milk is perceived to be the healthiest type of milk by 17% Americans.
    • But researchers say that among plant-based milk, soy milk is considered the "most balanced" when it comes to nutrition.
    • According to a market research projection report from PR Newswire, the main target group for plant-based milk products are middle/high income groups because of its premium price will remain higher compared to traditional milk.
    • Drivers of the projected price increase are due to the increasing demand in plant-based milk and beverages that include switching due to health reasons, milk allergy, ethical concerns on animal abuse, consumers looking for alternatives to dairy, vegan diet or lifestyle, and increased use among people with dairy milk/lactose intolerance.

    Research Strategy:

    After a thorough search, the information regarding the future price projection of plant-based milk in the US and/or its percentage for the next 1-2 years was found to be unavailable in the public domain.

    To find this information, we initially used market research and industry reports such as MarketWatch and PR Newswire among others. Aside from market overview, these sites were checked since they usually provide the drivers of growth (or decline) of a certain industry group and price is sometimes mentioned as factor of the revenue change. However, the reports available are mostly focused on dairy milk segment. One report from PR Newswire, however, was focused on plant-based beverages market, but the only relevant information is the premium pricing of plant-based milks that remains a challenge in manufacturers and no specific price projection was mentioned. Additionally, relevant reports from websites like Mintel, Plant Based Foods, and Dairy Herd only have the current and historical price changes of plant-based milk and no projections.

    Secondly, we tried to look for the top players in the plant-based milk market. The idea was to get any projected price change that these companies foresee which could affect their future sales. One example was Oatly, a plant-based milk which was launched in the US in 2016, which saw a rapid growth among Americans who prefer dairy alternatives. However, research on price changes among these players like Oatly mostly uncovers only their current market status, growth, placement, and production rate; nothing cited specific to prices. The absence of the future price projection could be due to its confidentiality for competitive reasons.

    We also tried to triangulate the information by checking the price projections of government websites either on milk products or plant-based foods in general and try to get any available information referring to the overall price changes on these categories. Through this strategy, we found a recent price projections up to 2028 from the US Department of Agriculture (USDA) which is detailed per year. But the available prices are focused on farm-level dairy milk that is foreseen to increase from 2019 to 2028 and no percentage was mentioned for plant-based milk or plant-based foods in general which we can use as a proxy or triangulate based on the percentage change in all milk category. The website Milk Business also has mentions of price change based on the USDA World Agriculture Supply and Demand (WASDE), but it was focused on Class III (milk used for cream cheese and hard cheeses) and Class IV (milk used for dry products and butter) and not on plant-based, dairy alternatives.

    Lastly, we looked for information that tackles how the price of milk was computed based on its components. This way we can possibly have an estimate of the future price changes if we can also find the composition of plant-based milk and the possible future changes (increase/decrease) in its components. We found a comprehensive article about the regulations followed by USDA from the Federal Milk Marketing Orders (FMMO) that the price of milk is based on its components of skim milk (measured in hundredweight or cwt) and butterfat (measured per pound). However, the only available information is for the computation of the traditional milk, based on its "class" and no information is related to plant-based milk.
    Part
    02
    of four
    Part
    02

    Animal-based Milk: Prices

    The average price of US animal-based or dairy milk has fallen from $17.65 per hundredweight (cwt) in 2017 to $17.30 per hundredweight (cwt) in 2019. The United States Department of Agriculture (USDA) projects a progressive rise in all milk product prices from $17.40 per hundredweight (cwt) in 2020 to $17.55 per hundredweight (cwt) in 2021. These are outlined below.

    USDA DAIRY DEFINITION

    US MILK PRICES 2017-2019

    • The USDA published price projection data in the 2019 Dairy Outlook Report for all milk products under dairy from 2017 to 2028.
    • All dairy milk products had an average price of $17.65 per hundredweight (cwt) in 2017.
    • All dairy milk products had an average price of $16.40 per hundredweight (cwt) in 2018.
    • All dairy milk products had an average price of $17.30 per hundredweight (cwt) in 2019.
    • This shows a dramatic drop in 2018 prices followed by a rebound in 2019.
    • Hoards.com observed that a profitable 2019 will help dairy producers' bottom lines move in the right direction.
    • The USDA also reported that the ratio of farmer's share or farm price to retail price of whole dairy milk has oscillated between 40 and 60 percent in the last decade.
    • The highest farm price to retail price proportion was in 2014 at 61 percent.
    • The lowest was in 2016 at 47 percent, with farmer's shares falling to $1.65 per gallon of whole milk compared to $2.26 in 2014.

    US MILK PRICE PROJECTION 2020-2022

    • According to the Dairy Outlook report, all dairy milk products are projected to have an average price of $17.40 per hundredweight (cwt) in 2020 compared to $17.30 in 2019.
    • All dairy milk products are projected to increase its average price to $17.55 per hundredweight (cwt) in 2021.
    • All dairy milk products are projected to increase its average price to $17.80 per hundredweight (cwt) in 2022.
    • Though price projections show an incremental increase over the next 1 to 2 years, the USDA also observed that the 2028 price for all milk products is just $2.25 higher than 2020 prices.
    • This gradual price increase is attributed to rising feed costs, the shift to larger dairy operations, and retaliatory tariffs among other factors.
    • The upward projection in prices of all milk products is expected to cover the slight rise in feed costs as well.
    • The strengthening profitability is predicted to slow down the culling of milk cows and to possibly increase the size of existing dairy herds.
    Part
    03
    of four
    Part
    03

    Sour Cream: Prices

    Overall, the average price of sour cream has grown by a cumulative annual growth rate (CAGR) of 1.25% (calculations below) between 2016 and 2019. The average price for sour cream over the last three years has been epileptic, peaking at $1.85 in 2017 and the lowest average price of $1.55 in 2018. On the other hand, the research team was unable to provide how the average price is predicted to grow in the next 1-2 years after an exhaustive search of the public domain.

    HISTORICAL SOUR CREAM PRICE

    • As of Friday, September 6, 2019, the average price for 16 ounces of sour cream in the United States was $1.64 and $1.82 a week before that.
    • At the same period in 2018, the average price for 16 ounces of sour cream in the United States was $1.55.
    • As of Friday, September 8, 2017, the average price for 16 ounces of sour cream in the United States was $1.85, and $1.77 a week before that.
    • In 2016, the average price for 16 ounces of sour cream was $1.58 as of the first weekend of September.
    • From the above data points, it is evident that the average price for sour cream over the last three years has been epileptic, peaking at $1.85 in 2017 and the lowest average price of $1.55 in 2018.
    • Overall, the average price of sour cream has grown by a cumulative annual growth rate (CAGR) of 1.25% (calculations below) between 2016 and 2019.
    • The difference in the weekly data presented for 2019 (from $1.82 to $1.64 a week later) and 2017 (from $1.77 to $1.85 a week later) above shows how volatile the pricing for sour cream can be in the United States.

    USEFUL FUTURE INSIGHTS ON THE UNITED STATES SOUR CREAM MARKET

    • According to Statista, there are 235.35 million Americans who consume sour cream.
    • The same source projects that the number of Americans who consumer sour cream will shrink to 235.08 million in 2020 before growing to 236.79 million in 2021.
    • Using the law of demand and supply, it is probable that the average price of sour cream will reduce in 2020 due to lower demand, before rising in 2021 due to increased demand. This is based on an "all things being equal" premise.
    • The United States sour cream market is expected to reach USD 405.61 million (calculations below) by 2021.
    • The United States sour cream market was worth USD 371.8 million (calculations below) in 2017.

    Research Strategy

    While we were able to provide a historical analysis of the average price of sour creams in the United States, we were unable to provide data on the projected average price of sour creams. To determine the projected average price of sour cream in the United States, we commenced our research from government sources, in particular, The United States Department of Agriculture (USDA). This is because the USDA, through the Agricultural Marketing Services department publishes a weekly National Retail Report on the diary market. This report provides the average price for dairy products for each week, including sour cream. A thorough scan of the USDA and other related government websites did not yield any future projections of the sour cream market. We also scoured through market reports and articles on the sour cream market but these sources only contained the market size, growth figures, key players, as well as market share.

    Our next strategy was to look through the annual reports, investor documents, and press releases of key players in the sour market to see if these players provided useful insights on the future of the industry. Some of the examined key players include Kraft Foods Group, Inc., Daisy Brand LLC, and Dean Foods. The documents perused from each of these companies did not reveal any price-related insights that we could use to predict the future price of sour cream in the United States. What we came across were press releases related to general information; for example, we found that Kraft has put its Breakstone’s business, which sells cottage cheese, butter and sour cream for sale.

    We also attempted to triangulate the projected average price in the United States using multiple data points. We reckoned that if we could get the market size for 2020 or 2021 and then the total consumption of sour cream, we could estimate the average price. Our research turned up data points that allowed us to estimate the market size (calculations) of the sour cream market for 2021. On the other hand, determining the total consumption of sour cream proved more difficult. Statista provided the projected number of Americans who will consume sour cream in 2021, as well as the annual domestic consumption for 2017. These data points did not suffice to triangulate the projected average price for 2021. For example, data on the total annual consumption for 2021 was critical to our calculations and our search through market reports, government sources, statistical databases, and news articles did not yield any tangible data.

    It is important to stress that as evidenced by the average price data provided above, the average price for sour cream in the United States is extremely volatile, and may be one of the reasons why data is not available on the topic. The screenshots of the Statista sources can also be accessed from the attached document.

    CALCULATIONS

    The Growth rate of sour cream's average price (2016-2019)

    Using an online calculator, and inputting the variables below, we were able to determine the growth rate of the average price for sour cream between 2016 and 2019.
    • Growth variable: Unknown variable
    • Number of periods (2016-2019): 3
    • Initial value (average price in 2016): $1.58
    • Final value (average price in 2019): $1.64
    Between 2016 and 2019, the average price of sour cream had a CAGR of 1.25%.

    Market Size

    According to Mordor Intelligence, the North American sour cream market was valued at USD 572 million in 2017 with a CAGR of 2.2% between 2018 and 2023. Therefore, using an online CAGR calculator and inputting the variable below, we calculated the market size for 2021.
    • Growth variable: 2.2%
    • Number of periods (2017-2021): 4
    • Initial value (average price in 2017): USD 572 million
    • Final value (average price in 2021): Unknown variable
    The market size for the North American sour cream market is projected to reach USD 624.02 million by 2021.

    Mordor Intelligence also reports that the United States accounts for 65% of the market, therefore, the United States sour cream market is expected to reach USD 405.61 million (65% of USD 624.02 million) by 2021. The United States sour cream market was worth USD 371.8 million (65% of USD 572 million) in 2017.
    Part
    04
    of four
    Part
    04

    Cottage Cheese: Prices

    In the last 3 years, the average price of cottage cheese has seen both increases and decreases within a range of $0.13 per pound with a high of $1.86 in 2016 and a low of $1.73 in 2017. The price of cottage cheese is predicted to increase by 3.7% or $0.06 per pound over the next two years.

    Average Price 2016-2019

    • According to the USDA, the average price of a 16-ounce container of cottage cheese in the U.S. in 2016, 2017 and 2018 was $1.86, $1.73 and $1.79, respectively.
    • While the average price of cottage cheese in 2019 is not yet available, the USDA publishes the average retail price of various dairy products, including cottage cheese, every week. In the most recent week (ending Friday, September 6, 2019), the average price of a 16-ounce container of cottage cheese in the U.S. was $1.65 while in the previous three weeks (ending August 30, August 23 and August 16), the average price was $1.89, $1.75 and $1.61, respectively. Therefore, the average price for the last four weeks is calculated to be $1.73 [(1.65 + 1.89+1.61 + 1.65)/4].
    • Based on the above data, it can be concluded that over the last 3 years, the average price of cottage cheese has been up and down within a range of approximately $0.13 per pound with 2016 having the highest prices and 2017 having the lowest.

    Predicted Change 2019-2020

    • While no price forecasts specific to cottage cheese were found, the USDA forecasts that the average price of cheese per pound will increase from $1.62 in 2019 to $1.66 in 2020 and $1.68 in 2021. This represents a predicted increase in price of 3.7% over the next two years {[(1.68-1.62)/1.62]*100}.
    • If we assume that the price of cottage cheese will experience the same increase as the price of the overall cheese category, we can predict the approximate price increase for cottage cheese over the next two years to be $.06 per pound (1.73*.037), resulting in a predicted price per pound of $1.79 (1.73+.06) in 2021.

    Research Strategy

    Average annual prices of cottage cheese in the U.S. for 2016-2018 and the average weekly prices for the last four weeks were gathered from the Dairy Market News report published weekly by the USDA. We then searched through additional reports on the USDA website to identify reports that detail any predicted changes in the price of cottage cheese in the next one to two years. While we did find information on the predicted priced changes for dairy products in general and the larger cheese segment of the dairy industry, we did not find any reports detailing predicted price increases for cottage cheese specifically. We then reviewed available information on the websites of dairy industry associations and organizations, such as the American Dairy Association and the National Dairy Council, for information specific to predicted price changes for cottage cheese in the coming years. Again, we found information on the outlook of the overall dairy industry, but no information specific to the price of cottage cheese in the next 1-2 years. Finally, we reviewed news stories, press releases and market reports specific to the dairy industry in general as well as cheese and cottage cheese specifically. While we found information related to the increasing popularity of cottage cheese and trends in cottage cheese products, we did not find any information specific to the price of cottage cheese in the coming years. Therefore, we decided to use the information about the cheese segment from the USDA as a proxy for cottage cheese, as outlined above.
    Sources
    Sources

    From Part 01
    Quotes
    • "In some cases, nut or oat milk can be two to three times the cost of a gallon of whole or skim cow's milk."
    • "These new alternatives are so popular, they have grown by 61 percent over the past five years, according to data collected by research firm Mintel. In 2017, the firm estimated that plant-based milk sales reached $2.11 billion, while sales of dairy milk fell 15 percent in the previous five years."
    Quotes
    • "While almond (64 percent market share), soy (13 percent market share) and coconut (12 percent market share) remain staples in the category, new non-dairy milk types are sparking excitement as consumers look to diversify their non-dairy milk repertoire. "
    Quotes
    • "In a study published last year in the Journal of Food Science and Technology, researchers reported that no plant-based milk product matches the nutrients provided by cow’s milk, but noted that soy milk was the most balanced in terms of nutrition. "
    • "China is the largest export customer for US soy, including products like soy milk."
    Quotes
    • "Plant-based milk now represents 15% of the total milk market."
    Quotes
    • "Almond milk is the plant-based market’s biggest driver, ahead of soy milk at the No. 2 spot. Oat milk, coconut, cashew or rice milk are also gaining traction."
    Quotes
    • "Consumers are making the switch for health reasons, intolerance to dairy, ethical concerns about animal abuse in modern dairy farming practices — or simply for wanting another alternative to dairy, even if they have to pay more for it, industry experts say."
    Quotes
    • "Since 2015, the calculated per unit value of traditional milk has declined by an average of 8 percent. Over this same period, the calculated per unit value of almond beverages has declined by 5 percent, the value of soy beverages has fallen by 2 percent. Coconut beverages have increased in value by 13 percent since 2015."
    From Part 02
    Quotes
    • " Topics > Animal Products > Dairy"
    • "Dairy farms, overwhelmingly family owned and managed, are generally members of producer cooperatives. The industry has seen a consistent decline in the number of operations, matched by a rise in the number of cows per operation."
    • "Dairy products include fluid beverage milk, cheese, butter, ice cream, yogurt, dry milk products, condensed milk, and whey products. "
    • "Commodity Costs and Returns, a data product that provides annual estimates of production costs and returns for major field crops, milk, hogs, and cow-calf. "
    Quotes
    • "(p.6) Office of the Chief Economist, USDA Dairy Long-Term Projections to 2028 "
    • "(p.6) Prices: 2017 2018 2019 2020 2021 2022 All Milk $/lb. 17.65 16.40 17.30 17.40 17.55 17.80"
    • "(p.5) The 2028 all-milk price is expected to be $19.65 per cwt, $2.25 above 2020. "
    Quotes
    • "Over the past decade, the farm share for a gallon of whole milk—the ratio of what dairy farmers received (farm price) to what consumers paid in grocery stores (retail price)—has fluctuated between 40 and 61 percent."
    • "The farm price of whole milk fell from $2.26 per gallon in 2014 to $1.65 in 2015 before bottoming out at $1.51 in 2016, or 47 percent of the retail price. "
    • "In 2017, the farm price of whole milk returned to $1.65 per gallon, and dairy farmers received 51 percent of whole milk’s retail price. "
    Quotes
    • "Dairy Whole milk, one gallon 6/13/2019"
    • "ERS compares prices paid by consumers for food with prices received by farmers for corresponding commodities. This data set reports these comparisons for a variety of foods sold through retail foodstores such as supermarkets and supercenters."
    • "Year/Retail Price/Farm Value/Farm Share 2016 3.20 1.51 47 2017 3.23 1.65 51 2018 2.90 1.51 52"
    Quotes
    • "The improvement in milk prices offsets the slight increase in feed costs to push income over feed costs for dairy producers to the highest level since 2017 when income over feed costs averaged $10.35."
    • "As profitability improves, culling of milk cows will slow, resulting in more growth in milk per cow or possibly an expansion of dairy herds. Feed quality and quantity for dairy cows may also slow until the 2019 harvest is complete."
    • "Profitability is not expected to be drastically above or below the level to maintain or grow milk production in any one month, but it does look like a year that could help some dairy producers’ balance sheets."